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XAO Technical Analysis

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One thing that fascinates me about upside down charts is that most of them don't look "right". Without being able to quantify what it is, they look wrong somehow. There's a huge untapped market inefficiency lurking somewhere in a deep dark pool!
 
Gringotts Bank said:
One thing that fascinates me about upside down charts is that most of them don't look "right". Without being able to quantify what it is, they look wrong somehow. There's a huge untapped market inefficiency lurking somewhere in a deep dark pool!
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Very true....

Well GB, one thing that's obvious is that the declines are slow, and the inclines are fast. The opposite of a normal market!

To me, that's what makes it look so strange.

CanOz
 
CanOz said:
Very true....

Well GB, one thing that's obvious is that the declines are slow, and the inclines are fast. The opposite of a normal market!

To me, that's what makes it look so strange.

CanOz
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There should be a way to exploit that, but I can't think how. Any ideas?
 
Gringotts Bank said:
There should be a way to exploit that, but I can't think how. Any ideas?
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The way to exploit what? The upside down chart looking strange?

If you are talking about exploiting the difference in slope between rises vs falls, you'd probably need a strategy around some volatility-based instrument (options).
 
CanOz said:
Very true....

Well GB, one thing that's obvious is that the declines are slow, and the inclines are fast. The opposite of a normal market!

To me, that's what makes it look so strange.

CanOz
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It's important to understand the link between volatility and compound returns...
t is important to note that risk premiums- or the relationship between required higher rates of return for higher risk- are arithmetic. That means that the curious underperformance of high risk stocks/assets versus low risk stocks/assets probably has less to do with a hidden risk factor or behavioral bias, but rather the fact that we are compounding our wealth
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http://cssanalytics.wordpress.com/2...link-between-volatility-and-compound-returns/
 
skc said:
The way to exploit what? The upside down chart looking strange?

If you are talking about exploiting the difference in slope between rises vs falls, you'd probably need a strategy around some volatility-based instrument (options).
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I think this is the concept of option skew? Option prices reflect that stocks fall at a fast rate than they rise.
 
tech/a said:
97% of domestic traders do.
3% ARE making money 97% are gambling that they MAY make money.
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Yes, the goal would be to "lose" money, inverted chart wise.
Basically that chart highlights why not to average down in an actual falling market, I was poking fun at averaging down.

I've been wondering about value investors, in a falling market the lower the price goes, the better the fundamentals look, and the more money is lost.
Would it be correct that the higher the market goes the worse the fundamentals? Because the fundamentals are clearly u/s at the moment, I'm curious how much worse they will get.

My conclusion, buy into crappy fundamentals for gain.
 
Struzball said:
Yes, the goal would be to "lose" money, inverted chart wise.
Basically that chart highlights why not to average down in an actual falling market, I was poking fun at averaging down.

I've been wondering about value investors, in a falling market the lower the price goes, the better the fundamentals look, and the more money is lost.
Would it be correct that the higher the market goes the worse the fundamentals? Because the fundamentals are clearly u/s at the moment, I'm curious how much worse they will get.

My conclusion, buy into crappy fundamentals for gain.
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This whole question was played out at length with ducati a few years ago.

https://www.aussiestockforums.com/forums/showthread.php?t=2829

If Duc had averaged down as his fair value stocks fell he would have blown up sooner.
I liken the exercise to So Cynical and Robustas threads.
Both still in the process.
Both a little better managed (Portfolio wise) Than Duc's.

I'm sure you'll find it interesting reading.
 
tech/a said:
If Duc had averaged down as his fair value stocks fell he would have blown up sooner.
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Guy buying "fundamentally sound" oil, mining and other small cap specialities blows up his account. Disapproves value investing & averaging down forever.
 
Ves said:
Guy buying "fundamentally sound" oil, mining and other small cap specialities blows up his account. Disapproves value investing & averaging down forever.
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Well you'd expect in a screaming Bull market he'd at least stay solvent.

There are many traders Technical and fundamental who cant turn a profit.
They are too hung up on the What (mechanics---value investing---breakout trading---mean reversion) than the Why (what you do---how ever you do it ) a method could have a chance to be/will be profitable.
 
I guess we should try and stick to the topic, Technical Analysis of the XAO.:xyxthumbs

CanOz
 
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